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In Re: Trism, Inc. Trism Heavy Haul, Inc. E.L. Powell & Sons Trucking Co., Inc. Trism Specialized Carriers, Inc. Trism Special Services, Inc. Trism Secured Transportation, Inc. Diablo Systems, D/B/A Diablo Transportation, Inc. Trism Eastern, D/B/A C.I. Whitten Transfer, Inc. Tri-State Motor Transit Co. Aero Body and Truck Equipment, Inc. Trism Logistics, Inc. Trism Equipment, Inc. Trism Transport, Inc. Trism Transport Services, Inc., as Individual Entities and as Debtors in Possession, Debtors. Official Committee of Unsecured Creditors v. Trism, Inc. Trism Heavy Haul, Inc E.L. Powell & Sons Trucking Co., Inc. Trism Specialized Carriers, Inc. Trism Special Services, Inc. Trism Secured Transportation, Inc. Diablo Systems, D/B/A Diablo Transportation, Inc. Trism Eastern, D/B/A C.I. Whitten Transfer, Inc. Tri-State Motor Transit Co. Aero Body and Truck Equipment, Inc. Trism Logistics, Inc. Trism Equipment, Inc. Trism Transport, Inc. Trism Transport Services, Inc., as Individual Entities and as Debtors in Possessi

Citations: 328 F.3d 1003; 2003 U.S. App. LEXIS 9452; 41 Bankr. Ct. Dec. (CRR) 78Docket: 02-2060

Court: Court of Appeals for the Eighth Circuit; May 16, 2003; Federal Appellate Court

Narrative Opinion Summary

In this case, Trism, Inc. and its subsidiaries filed for Chapter 11 bankruptcy and subsequently sought court approval to sell their assets to Bed Rock, Inc. The agreement included a release of Bed Rock, its owner Glenn Garrett, and CIT Group/Business Credit, Inc. from avoidance liability. The Official Committee of Unsecured Creditors appealed the release, but the Bankruptcy Appellate Panel dismissed the appeal as moot under 11 U.S.C. § 363(m), which protects good faith purchasers by ensuring the finality of bankruptcy sales. Prior to bankruptcy, CIT had financed Trism with Garrett as a junior participant. The Asset Purchase Agreement required the bankruptcy court to release Garrett and CIT from liability in order for the sale to proceed. The court found that Bed Rock acted in good faith and the sale was in the best interest of creditors. The Committee argued against CIT's release, claiming it was not part of the sale notice, but the argument was considered waived as it was not raised before the BAP. Ultimately, the BAP's dismissal was affirmed, emphasizing that section 363(m) protects the purchase from appeals that might affect the sale's validity and does not provide exceptions for creditor bidders.

Legal Issues Addressed

Good Faith Purchaser Protection

Application: The court found Bed Rock acted in good faith, which justified the protection under 11 U.S.C. § 363(m) to secure the finality of the asset sale.

Reasoning: The court found that Bed Rock acted in good faith and that the sale was in the best interest of the creditors.

Interrelated Sale Provisions

Application: The bankruptcy court determined that releasing CIT was integral to the sale agreement, and modifying it would impact the terms negotiated between the parties.

Reasoning: A related provision in the sale order also impacts its validity if it is integral to the sale agreement. A provision is deemed integral if altering it would negatively affect the agreed terms between the parties.

Mootness of Appeal

Application: The appeal was dismissed as moot because the Committee did not obtain a stay pending appeal, and altering the sale order would affect the sale's validity.

Reasoning: A challenge to a sale order is moot if no stay was obtained pending appeal and if any reversal would impact the sale's validity.

Protection under 11 U.S.C. § 363(m)

Application: The court applied Section 363(m) to dismiss the appeal as moot because reversing or modifying the bankruptcy sale order would adversely affect the validity of the sale.

Reasoning: Section 363(m) prevents the modification or reversal of a bankruptcy court's sale order from affecting the sale's validity, thus protecting the expectations of good faith purchasers and ensuring the finality of such sales.

Waiver of Arguments Not Presented

Application: The Committee's new argument concerning the absence of specific mention of CIT's release in the sale notice was waived because it was not raised before the BAP.

Reasoning: Additionally, the Committee claims that CIT's release from avoidance liability is not covered under section 363(m) due to the absence of specific mention in the sale notice. However, this argument was not presented before the Bankruptcy Appellate Panel (BAP) and is thus considered waived.